– Amazon is in the business of e-commerce – and considered the go-to site for online shoppers.– JP Morgan Chase is one of the largest banks and financial services organizations in the United States.
– Warren Buffett is the chairman and CEO of Berkshire Hathaway, one of the largest companies in the world.
And now, the two industry giants (Amazon and JP Morgan Chase) and Buffet, considered one of the most successful investors in the world, are joining forces.
No that’s not a mistake.
The surprise news was released on January 30, 2018 and although vague, identified plans for Amazon, JP Morgan Chase, and Buffet teaming together to create an independent health insurance company, specifically created to help provide another option for consumers looking to reign in rising health care costs.
But the rest of the details are vague, and left many wondering just how this company would work – and more important, how they would make it work.
In fact, a joint statement on the partnership simply said:
“The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality, and transparent healthcare at a reasonable cost.
Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today. By bringing together three of the world’s leading organizations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.”
Now, just over a month later, industry insiders are still wondering how this unique partnership will shake out – and whether or not it will work.
The Wall Street Journal reported “Plans are still evolving and nothing has been decided beyond forming a company and moving ahead, according to people with knowledge of the matter.”
Meanwhile, Amazon founder and CEO Jeff Bezos admitted to National Public Radio this venture faces enormous challenges. “The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Bezos. “Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort.”
In a mail.com article Paul Fronstin, an economist with the nonprofit Employee Benefits Research Institute, expressed his opinion, stating: “One of the messages they are sending is they’ve given up on traditional ways in which employers have tried to reduce costs or manage costs better.”
The Mail.com article added that employers are up for trying almost anything that can reduce costs and that “benefits experts speculated that this new company could create a virtual marketplace that makes shopping for health care as easy as buying a shirt on Amazon. Or it could move directly into buying prescription drugs. Or it could be a system that bypasses insurance companies’ altogether and contracts directly with doctors and hospitals for better deals.”
And that’s just why some feel this partnership could work.
A day after the surprise announcement, MarketWatch published an opinion article by J.B. Silvers, a professor of health finance at Case Western Reserve University, titled The Amazon-Berkshire-JPMorgan health initiative can work — if doctors go along.
Silvers is also a former health insurance CEO, and said “based on their history and financial power, this new company could be a disruptive force in the industry, adding while these issues are all important, this partnership does not address other problems of the broken U.S. health care system and its ever-expanding costs. Also of concern are the role of skyrocketing drug prices protected by patents and direct-to-consumer advertising; expensive end-of-life decisions; explosive potential use of genetic information; and prevention and management of chronic conditions derived from personal choices.”
For now though, it seems to be too early to determine if this partnership can work, but there are certainly plenty opinions on the potential. Like most new initiatives, there are those who see positives, and those who see negatives. At this point, many are still unsure on the future – and the impact it can have.
One thing most people seem to agree on is significant changes need to be made to health insurance markets. But just how to do that…is another story, and another challenge.
A challenge three giants like Amazon, JP Morgan Chase and Warren Buffett hope to team up to tackle.
Can it work?
No one really knows for now. But everyone is eagerly watching – and waiting – to see how it all plays out.
What do you think? Can it work? Leave a comment and tell us your thoughts!
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